Health reform: Only a cease-fire in a political hundred years' war

Four dominant political forces drove the process and product of national health reform during the past two years: federal budgetconstraints; public concerns about the size and reach of the federal government; the time pressure of the congressional calendar; and the political parties’ high-stakes, all-or-nothing bets on what became President Barack Obama’s defining policy priority. Republican congressional leaders saw little advantage in offering more detailedalternatives. Congressional Democrats calculated that they had even moreto lose politically by abandoning health reform legislation than by pushing it through Congress. This essay argues that passage of the legislation merely represents a cease-fire in a long-standing war and that more battles between forces for “implementation” and those for “repeal and replace” are to come.

Four dominant political forces drove the process and product of national health reform during the past two years: federal budgetconstraints; public concerns about the size and reach of the federal government; the time pressure of the congressional calendar; and the political parties’ high-stakes, all-or-nothing bets on what became President Barack Obama’s defining policy priority. Republican congressional leaders saw little advantage in offering more detailedalternatives. Congressional Democrats calculated that they had even moreto lose politically by abandoning health reform legislation than by pushing it through Congress. This essay argues that passage of the legislation merely represents a cease-fire in a long-standing war and that more battles between forces for “implementation” and those for “repeal and replace” are to come.

Four dominant political forces drove the process and productof national health reform during the past two years: federal budgetconstraints; public concerns about the size and reach of the federalgovernment; the time pressure of the congressional calendar; and thepolitical parties

’

high-stakes, all-or-nothing bets on what becamePresident Barack Obama

’

s defining policy priority. Republicancongressional leaders saw little advantage in offering more detailedalternatives. Congressional Democrats calculated that they had even moreto lose politically by abandoning health reform legislation than by pushing it through Congress. This essay argues that passage of thelegislation merely represents a cease-fire in a long-standing war and thatmore battles between forces for

“

implementation

”

and those for

“

repealand replace

”

are to come.

T

helatestbattleovervariouspropos-als for national health insurancebeganduringthe2008presidentialelection. I would argue that it wasthelatestphaseofaHundredYears

’

War, which began when, as a third-party presi-dential candidate in 1912, Theodore Rooseveltissued the first call for a national health careplan. Despite enactment of health reform legis-lation in March 2010, it remains to be seenwhether or not we have reached a hard-foughtend to the struggle or merely a cease-fire.The fundamental components of the PatientProtection and Affordable Care Act of 2010largely reflect the 2008 campaign proposals of Barack Obama. They are employer play-or-pay mandates, insurance exchanges, a public insur-ance plan option, and the promise to achieve

—

eventually

—

universal health insurance while in-creasingfederaltaxesonlyonwealthyAmericansand lowering the rate of growth in future healthspending. Added to this list in the final law wasanindividualmandate.AlthoughObamadidnotendorse a full-fledged individual mandate dur-ingthecampaign,hewarmedtotheideashortly after the election. Admittedly, these objectives included a num-berofinitiallimitations,exceptions,hedges,andpolitical escape routes, such as affordability andfirm-size exemptions from mandates, redefini-tion of

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universal

”

coverage, and delegation tofutureadministrativerulemakers.Butthelarger Democratic majorities in Congress after the2008 election had from the outset a firm under-standing of the new president

’

s template for health reform. The year ahead appeared to offer yetanotheronce-in-a-lifetimeopportunitytoen-act comprehensive national health reform thatgreatly expanded insurance coverage.

Initial Political Game Plan For Democrats

Learning From The Clinton Attempt

TheObama White House overcompensated for theprevioustop-downstrategyoftheClintonadmin-istration, which failed to get a health reform billthrough Congress in 1994. The Obama adminis-tration decided to defer to congressional leadersonmostoftheactuallegislativedetailsneededto

(tmiller@aei.org) is a resident fellowat the American EnterpriseInstitute, in Washington, D.C.JUNE 2010 29:6HEALTH AFFAIRS

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History

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Politics

flesh out president

’

s core proposals. This pro- videdmorecongressional

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buy-in

”

totheongoingprocess, but it created later headaches. Initialbills were bloated, complex, extremely partisan,and hard to reconcile across various factions of the Democratic caucuses in each chamber, letalone between the House and the Senate.

Co-opting Industry Groups

Another early strategy was to co-opt potentially hostile indus-try groups, by cutting deals that protected themagainst downside risks to their businesses inreturn for commitments of early support. Boththepharmaceuticaland hospitalsectors literally

“

gave at the office

”

in the first half of 2009, inreturn for negotiated limitson howmuch mightotherwise be extracted from them. They werepromisedanexpanded poolofmillions of newly insured

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paying

”

customers, so that they couldmake up their losses from lower-than-expectedreimbursement levels and new taxes on their business operations.Other groups were kept on a leash with few tangible benefits in return

—

for example, the American Medical Association, which appearedto care mainly about a looming cut in Medicarepaymentsto physicians. America

wasthatsomepotentialareasforadditionalcostcontainment were foreclosed. And the adminis-tration

’

s back-room arrangements with interestgroups made it at least somewhat harder to sellhealth reform to the broader public.

Lack Of Progress In Congress

One key strategy failed: the plan to make quick, steady progress in moving bills through each chamber of Congress and maintaining an aura of inevi-tability. Like some species of shark, if the healthreform package did not keep moving, it couldsink and die. However, initial time lines for bringing a bill to the floor of both the Houseand the Senate by the end of July 2009 wereextended.

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Final

”

deadlines for approval of theoverall legislation

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initially by August 8, thenlater in the fall, and ultimately

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before Christ-mas

”—

weremissedrepeatedlythroughout2009.

Tactics To Limit Opposition AndReward Supporters

As the Obama administration

’

s principles for health reform were converted into legislativelanguage,the WhiteHousehad tomasteradiffi-cult political balancing act. This involved reas-suring many Americans anxious about disrup-tionstotheircurrenthealthcoverageandcarear-rangements or about mounting federal budgetdeficits, while offering more generously subsi-dized health benefits to lower-income constitu-ents and more jobs to those who serve them.The reassurance component necessitatedreaching an initial truce with employer-spon-sored insurance plans. Keeping employers

’ “

pri- vate

”

moneyonthetablealsohelpedlimitthenetbudget cost of the first installment of insurancecoverage growth. Insurance mandates for em-ployers and individualsto payfor most newcov-eragewiththeirownfundsactedlikeataxtohelpfund additional health spending that would notbe counted in the federal budget. Relying onexpanded Medicaid eligibility as a less expen-sive,

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Hamburger Helper

”

equivalent to accom-plish about half of the total targeted coverageexpansionallowedfederaldollarstobestretchedfurther, given Medicaid

The public-planoption, although very important to liberal activ-ists, was always vulnerable to elimination as asacrificialthrowawayinthelegislativeendgame.The public plan was politically radioactive tohighly energized grassroots opponents, whofeared that the legislation would quickly leadto a single-payer system. It also made moderateDemocratic members in Congress

—

especially those from swing districts

—

nervous about po-tential challengers in the November 2010 mid-term election.Moreover,thecombinationofvastlyexpanded

Togarner enough support to pass the legislation,its proponents needed to defuse charges that itwould add to runaway federal spending andmountingfederal debt in the midst of a sluggisheconomy. Some tax increases were repackagedas fees and excise taxes on parts of the health

Having lost seats in the 2008 election, con-gressional Republicans decided to play the bestremaining cards they had. Although marginal-ized under the majority-friendly rules of theHouse, Republicans initially had some leverageby remaining unified in the Senate. However, aparty switch by Sen. Arlen Specter of Pennsylva-niaandthefinalresolutionofthecontestedMin-nesota Senate race soon delivered enough votestotheDemocraticmajoritytoensureclotureonahealth reform bill

—

if the entire Democraticconference remained unified.

Focus On Cost Reduction

Asaresult,theop-portunities and incentives for comity and com-promiseintheSenatebecameevenmorelimitedthan usual. In both chambers, Republicans hadlittle opportunity to inject new elements intobills initially drafted by the majority. They fo-cusedmoreontheneedforreducinghealthcarecosts before substantially expanding insurancecoverage, limiting the complexity and pace of any health policy overhaul, and keeping further increases in the federal debt in check.

Riding A Wave Of Opposition

Inthefirsthalf of 2009, most interest groups deployed their resources in attempts to optimize the terms, or limit the burdens,of forthcoming health reformlegislation, which was generally seen as bothlikely and imminent. Republican members of Congress appeared to be surprised when early legislative proposals provoked a burst of publicoppositionthataroseindependentlyandoutsideofWashington,incongressionaltown-hallmeet-ings and among newly organized

“

Tea Party

”

grassroots activists.That initial uprising focused on fears abouthealth care rationing and the expansion of thepublic plan option, but it later expanded into abroaderbaseof opposition to the overall Obamahealthreformpackage.ThisemboldenedRepub-licansinCongresstourgea

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goslower

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approachthatmighthelpthemrunouttheclockonthema- jority

’

s original plan and see their political pros-pects improve over time. They found a reservoir of political support among elderly voters whofeared destabilization of current Medicare ar-rangementsandsuspectedthattheywouldsuffer from cuts in future Medicare spending growth.

Legislative Procedure

Giventheproceduralrules in the Senate that make it easy to delay legislation or even prevent its consideration onthe floor, and the opportunity to simply ride onthe back of growing public concerns about theprobable legislation, Republican congressionalleaders saw little advantage in offering more de-tailed alternatives. A bipartisan

“

Gang of Six

”

effort among Senate Finance Committee mem-berstodevelopacompromisebillbrokedownby early September. A later decision by Majority Leader Harry Reid (D-NV) to revive the publicoption in his November 2009 revamping of thecommittee

’

s bill lost the support of OlympiaSnowe (R-ME), the last remaining moderateSenate Republican still in play.House Republicans lacked the procedural op-portunities of their Senate colleagues to delay legislation. They simply offered a limited alter-native proposal in late October, as an amend-ment that they proposed to substitute for themain bill advanced by the House Democrats,the Affordable Health Care for America Act.The Republican amendment focused on reduc-ing the cost of health care and included only modest increases in insurance coverage.

Democrats Regroup

As most opinion surveys indicated sinking sup-port for the proposed legislation in the fallof 2009, congressional Republicans began toanticipate substantial electoral gains in theNovember 2010 midterm election. They felt thattimewasontheirside.CongressionalDemocratsscrambled to get their plans into law while stillholdingsubstantialmajoritiesinbothchambers.

From Health Care Reform To Health Insur-ance Reform

Facing a different political land-scape, President Obama adjusted his healthreformstrategy.Theadministrationbeganrefer-ring to the legislation as

everyone,except for more than ten million noncitizens,those who could not afford to buy even subsi-dizedcoverage,andthosewhowouldratherriskpayingapenaltythanpurchasemorecostlyman-dated insurance.

Weakened Individual Mandate

Meanwhile,thatmandatewasweakenedinreactiontopoliti-cal concerns about whether it was fair and rep-resented an undue burden on some Americans.This in turn led several private insurers to backaway from their previous soft support for theSenateversionofreformlegislationandtobeginfunding efforts to change, if not oppose, theevolving bills.